Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.

Archive for April, 2011

Chavista Justice moves in mysterious ways. While tens of thousands of prisoners are held in jail for years without the processes against them moving forward, others move speedily and efficiently thru the complicated maze of procedures, regulations, norms and laws, when the Government so desires.

Imagine this case from real life:

On Aug. 19th. of 2010 a person was detained.

The next day, Aug. 20th., all of the following took place:

-The Prosecutors went to a Judge in Caracas requesting something from it, related to the detention the prior day.

-The Judge admitted the request and ordered that a copy of his decision be sent to the Venezuelan Supreme Court

-That same day, the General prosecutor prepared her response to the case and sent it to the Supreme Court.

-That same day, the Venezuelan Supreme Court reviewed the case file, which is composed of thousands of pages.

-That same day, a Justice of the same Supreme Court elaborated a sentence made up of 138 pages.

-That 138 page project was then distributed that same day, fortunately all of the Justices were at the Supreme Court that day and had time to review and study the case and the 138 page decision.

-That same day, the Justices agreed on the proposed sentence, making it final.

-The decision was published that very same day in the webpage of the Venezuelan Supreme Court.

Of course, imagine in between, that thousands of copies had to be made of everything, papers sent from one place to the other, relevant laws checked for consistency, prior cases and sentences reviewed etc.

The case?

Of course, it was the Makled case, who was detained the previous day in Colombia, and in less than 24 hours Venezuela’s “Speedy Gonzalez” Justice made sure that its request for extradition of the drug kingpin was filed ahead of that of the US request. For the simple reason that Makled knows too much. He rose too fast, protected by the military and the Government. He is a crook, but so are all of his Chavista cronies, so they had to make sure he was sent to Venezuela to protect everyone. It was too costly for Makled to go to the US.

Strange statements from Minister Giordani. First he admits drastically, that the capitalism system works because of individual incentives. Yes, capitalism simply works, but then he seems to go on to say that his problem with it is the fact that individual profit is what motivates people, not the “common” good”

He got the most important part about basic Economics right: “People respond to incentives”. Cost and benefits determine how we behave, no communal thinking, no matter how human or generous we may be.

But then Chavez’ ignorant economic guru, who never studied economics, cites studies from last century “on”, which probably means that he only read the old ones, because nowhere in modern economic theory, Marxist or Capitalist, is oligopolic pricing and speculation associated with inflation. Least of all, for the state to participate in the markets like the Chavez Government is doing.

Inflation is just a monetary phenomenon, Venezuela and Giordani’s policies are proof of that, but Giordani has not had time to study that chapter apparently (or learn it from experience). And he never will, between screwing up Venezuela’s economy and writing his books, who nobody reads, he has no time to study.

It was truly a pathetic show. While Venezuela’s has product shortages, the electric network is suffering from years of lack of investment, most state industries don’t function, let alone pay their own way, there was Hugo Chavez giving away all of 667 cars built by Venezuela’s joint venture with Iran, called Venirauto. And then the bombastic promise (Why i it always “we will”, never )we have”) “we will build 16,000 of these cars in 2011”

So?

Over half a million cars were sold in Venezuela in 2007 and since the Venirauto cars are just modified Peugeots which have been built in Iran for years, all Chavez has accomplished is to import parts from Iran to be assembled here, not much different than what has been done for years. Except, of course, Venirauto has a green light to bring parts, while all other struggle to get a myriad approvals from the Government.

But let’s calculate it. GDP is one trilion Boliavrs at Bs. 4.3 per US$, it is around US$ 232 billion. Chavez kidnappped the country’s airwaves, forcing Ministers to be there, to give away 667 of these cars. There are two models of these cars, one sell for the not so socialist price of US$ 26,200 and the “cheap” model for $17,400 at the official rate of exchange. (We are talking 5.5 and 53.7 times the annual minimum salary, even if Chavez said lower prices)

If we assume that half the cars are of each model, then the cars “given out” by Hugo today, were worth 14.5 million dollars or 6.2 10-5 Venezuela’s GDP. (How much was the Nationwide broadcast worth in itself? How much advertising was lost?)

So, really, what’s the bid deal? If instead of building cars to compete with the private sector, Chavez was letting his Ministers work on solving health, electricity, transportation or water problems, the “people” who can not afford one of these cars would be much better off than they are.

But that is what makes today Chavez show so pathetic: There is no sense of orders of magnitude, no sense of the ridiculous. Chavez boasts about giving away 667 Veinrauto cars (You have to wonder if they added one at the last minute) while he is being lied about their price, which is likely to be subsidized anyway.

Just more fuel to the official BS, at a very high cost. I mean, has anyone seen a Venirauto Distributor, or is Chavez the only one?

Because Venirauto was started five years ago and as far as we know, it has yet to produce more than 4,000 cars.

It’s just not worth it.

Simply put, the military must not teach orders of magnitude in their courses, because clearly, Hugo has no clue at what size is relevant or important.

But of course, he squeezes the topic as much as he can, the picture above is today’s, but the ones below are testimony to how much hot air and time Hugo has devoted to such an irrelevant topic:

Note added: It turns out that in 2009, then Minister of Science and Technology, today Government pollster Jesse Chacon said Venirauto would make 16,000 cars in 2010, the same number Chavez is projecting for this year. More interesting, Venirauto lost money in 2010, giving up Chavez’ claim that the company makes money.

Oh, you mean we gave so much to Uruguay when oil was only $50 dollars a barrel and not $100 like now? Was that also the time when we bought 12,000 houses from them? Is Deputy Herrera living in one of the twelve built?

Really? How could it? A Ministry was created, a person with no clue or experience was put in charge of it. As little money as possible was spent. The wrong technology was purchased where investments were made. It rained all year.

Remember Pudreval? Thousands of Tons imported by PDVSA under the helm of still Minister of Energy and Oil Rafael Ramirez. Somehow he is untouchable. Chavez dismissed the problem. A Court ordered three of the Pudreval Directors jailed, the trial was annulled in record time by a Supreme Court that takes years to decide on very significant matters.But you know they care so much about due process for Chavistas, they ahd to do it.

But things stank so much, pardon the pun, that even Comptroller Russian had to say something (covering his behind a little?). Because his report did not mince words:

“It was Bariven (A PDVSA affiliate) and PDVAL (another PDVSA affiliate) that imported all the food without taking care of legal and technical criteria”

“In the inspections…of the containers of food…there was the presence of insects, rodents, both alive and dead, as well as feces. Similarly, we found packages of decomposing food, as well as past their perishable date, such that we had to declare them not apt for human consumption. From the analysis of the results of the inspection a sample of 37 containers out of 305, or 12.5% of them” (The syntax of the last sentence was technically abominable, the math was ff too)

Oh yeah, legal procedures for bidding on the purchase of the food were also ignored and not followed.

This guys are really good, they knew had to do nothing. I wonder why they were hired?

Friend @chegoyo, sent me this interesting historical tidbit about what may be the earliest use of the term “Devil’s Manure” in history.

It is a page from “Colony and Republic” of Rafael Arraiz. The Chapter is entitled “Stone Oil: Obssesion and sign” and it says:

“It was Gonazlo Fernandez de Oviedo y Valdes the first one to leave a written mention of Venezuelan oil in 1535, when he say it sprout without mixing with oil in a side of the island of Cubagua. It is written in his “Natural and General History of the Indias and the mainland of the Ocean Sea” in which he talks about a “source of a licquor like oil next to the sea” to later stigmatize it, among us, forever “some who have seen it say the locals call it Stercus Demonis” (Devil’s Manure)Thus, Fernandez de Oviedo was the first one to leave written record of its presence and at the same time, the pioneer that coined the term that many critics of national life have called it “The Devil’s Manure””

There you have it for history and the record, Perez Alfonso popularized the term, but the natives had it down pat earlier on.